Hoel, Michael; Karp, Larry - Fondazione ENI Enrico Mattei (FEEM) - 1999
We compare taxes and quotas when firms and the regulator have asymmetric information about abatement costs. Damages are caused by a stock pollutant. Uncertainty enters multiplicatively, i.e. it affects the slope rather than the intercept of abatement costs. We calibrate the model using cost and...